An Insolvency Practitioner, often referred to as an IP, is a financial professional who is licensed to act on behalf of businesses and individuals when they are experiencing financial difficulties and/or facing insolvency. The majority of the time, IPs are approached by companies who are in need of help in saving or closing their business, however, an IP may be appointed by a court when a compulsory liquidation has been ordered.
As well as being appointed to act on behalf of insolvent companies, Insolvency Practitioners also help directors of solvent companies who wish to liquidate their company in order to gain access to profits held within the company.
What does an Insolvency Practitioner do?
Insolvency Practitioners are often tasked with finding solutions for difficult situations. For example, IPs must close down businesses, or find a way of rescuing a business, should this be possible. As a result, an Insolvency Practitioner does not have a single role – it is their responsibility to carry out a number of different actions, which will differ depending on the case that they are appointed to.
Business Insolvency Solutions
Key roles of IPs can include:
Liquidations – Insolvency practitioners can oversee liquidations for both solvent and insolvent companies. An IP’s task is to release business or company assets and ensure that the are distributed legally to creditors as necessary.
In Creditors’ Voluntary Liquidations (CVL), creditors include suppliers, as well as banks and other financial lenders that may be owed by an insolvent company. In Members’ Voluntary Liquidations (MVL), when a solvent company is liquidated, released profits are distributed to directors and shareholders.
Administrations – An IP is appointed to be an administrator of a company, tasked with ensuring the best possible outcome for creditors, whether through the sale of the company or their assets, or through arranging the ordered shutdown of the business.
Nominee and supervisor – In Company Voluntary Arrangements (CVA), an IP is responsible for putting together a viable proposal for the CVA. A Statement of Affairs (SOA) is produced to inform creditors what they stand to receive in the event that the CVA is implemented.
Once a CVA is passed, an Insolvency Practitioner acts as supervisor, overseeing the implementation of the CVA and monitoring the performance of the business, ensuring that it stays on track to complete the CVA, and stand a better chance of success in the future.
Personal Insolvency Solutions
IPs can provide a range of insolvency options for individuals who are experiencing financial hardship, including:
Debt management plans (DMP) – For individuals who are unable to pay their debts as they fall each month, Insolvency Practitioners can help them enter into a DMP. A DMP is an informal agreement with creditors, in which an individual can arrange a compromise or a timetable of how much they can pay on a monthly basis.
Administration orders – If a creditor has obtained a County Court Judgment (CCJ) against an individual, the County Court can make an adminstration order, where the indivifual is to make regular payments to the court until repayment to creditors is complete. This is only an option where total debts are less than £5,000.
Debt relief orders (DRO) – DROs are an alternative to Bankruptcy. An IP can help individuals learn if they are eligible for a DRO, and guide them through the processes.
Bankruptcy – In some cases, Bankruptcy may be the best solution for serious debt problems. For individuals facing such a crisis, it’s important to speak to an IP who can make sure that Bankruptcy is the right option.
Individual Voluntary Arrangement (IVA) – This is a formal arrangement between an individual and their creditors, meaning it is legally binding on creditors. IVAs can be a viable alternative to help individuals avoid bankruptcy, most often for people who cannot make their monthly payments in full every month, but have some disposable income to pay creditors.
Insolvency specialists are experts in proposing IVAs to creditors, ensuring that the best option is agreed on for the individual and creditors.
Licensed Insolvency Practitioners in the South of England
If you are a business or an individual facing insolvency, experiencing financial difficulty, or looking to liquidate your solvent company, then you can contact BEACON LIP. For more information on Insolvency solutions, you can visit https://www.beaconllp.com/.